If true, at least this would put Greece on the backburner for a while. From Reuters, which has the scoop:

Spain is expected to ask the euro zone for help with recapitalising its stricken banks at the weekend, EU and German sources said on Friday, becoming the fourth country to seek assistance since Europe’s debt crisis began.

Five officials in Brussels and Berlin said the finance ministers of the single currency area would hold a conference call on Saturday morning to discuss a Spanish request for aid, although no figure on the assistance has been set.

The Eurogroup, which comprises the 17 euro zone states, will issue a statement after the call, which is scheduled to take place before midday (1000 GMT), the sources said.

“The announcement is expected for Saturday afternoon,” one of the EU officials said.

The dramatic move comes after Fitch Ratings cut Madrid’s sovereign credit rating by three notches to BBB on Thursday, highlighting the Spanish banking sector’s exposure to bad property loans and to contagion from Greece’s debt crisis.

Spain, with a nominal GDP (as of 2010) of $1.4 trillion, dwarfs that of either Ireland (nominal 2010 GDP = $229 billion), Portugal (nominal GDP = $204 billion) or Greece (GDP = $305 billion).  It is the eurozone’s fourth largest economy, after Germany, France and Italy, and it is the world’s 12-largest economy.

So this bailout would go much further to the heart of the eurozone than the previous bailouts to Greece, Ireland and Portugal.

Spain’s growth has stalled (or has been in recession) since 2009 and unemployment was 24.3% as of April 2012.  Although Spain’s banks have been fairly conservative, and Spain ran a surplus (or a very modest deficit) for much of the prior decade, the bust of a construction and property-value boom has left it in the midst of a staggering economic decline that brought Mariano Rajoy and the Partido Popular (PP — People’s Party) to power in December 2011 after nearly a decade of rule by prime minister José Luis Rodríguez Zapatero, whose Partido Socialista Obrero Español (PSOE — Spanish Socialist Workers’ Party) took much of the brunt of Spanish anger about the sudden economic turn, after implementing harsh budget cuts in response to the reality of reduced revenues and rising anxiety among Spanish bondholders.

So just a little over half a year after taking power, it will be on Rajoy’s watch — Rajoy promised never to accept an aid package — that Spain seeks a bailout.

The Spanish situation has taken a precarious turn over the past couple of weeks, when it turned out that Bankia, a conglomerate of cajas (savings banks) that had invested Spanish savings in the real estate market, was insolvent and needed to be recapitalized by the Spanish government, which, itself may or may not have had the euros to provide to Bankia and which might not be able to raise on the open market: the price for 10-year notes has been climbing steadily since March.

Making matters worse, a Spanish plan to tap the European Central Bank for euros that Spain would, in turn, use to recapitalize Bankia was quite publicly rejected by the ECB.

The sum of this, politically, has made the Rajoy government seem rather feckless:

Mr Rajoy and his government are facing growing domestic criticism over repeated errors of strategy and communication, which that have given an impression that Madrid has run out of ideas on how to handle its financial and economic crises.

Madrid added to the sense that it was improvising when the government admitted on Monday that it had not contacted the European Central Bank about the possibility of recapitalising Bankia using liquidity obtained in return for posting the debt as collateral.

And that was a week ago — Spain has been unable to reverse its confidence nosedive.

So now the Rajoy government appears to be caving to what economic forecasters have long said was inevitable — according to the IMF, Spanish banks allegedly need €90 billion in recapitalization from the Spanish government, and the Spanish government would need to raise €40 billion of that from external sources.

If true, it will mean that Rajoy will not even make it seven months in office before seeking a bailout, after making the same mistakes of which he accused the Zapatero government.  While Rajoy will have a strong parliamentary majority through 2015, his government is finding that, like many other European governments this decade, governing is a lot harder than opposition:

“His communication has been dreadful, miserable,” said a senior EU official who has frequent meetings with Rajoy. “He looks paralyzed, as if he was only concerned by finding a way not to be overthrown by the next wave but had no real clue of how to do it.”